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Leading Practice Mining Acts Review - Statutes Amendment Bill released | South Australia's Magnetite Strategy launched

Recent announcements regarding the South Australian mineral and energy resources sectors

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This update covers the October 2017 period and is compiled from information publicly released by companies and Ministerial news releases.

Readers should refer to the latest information available on company websites, particularly in regard to making any forward investment decisions.

Company news

Alliance Resources – Tyranna Resources

Mixed results have been returned from the latest drilling at the Telephone Dam zinc–lead–silver and Zealous tin prospects within the Wilcherry project joint venture between Alliance Resources (51%) and Tyranna Resources (49%) (ASX release 5 October 2017). The best result was from drillhole 17TDDH001 at Telephone Dam:

  • 12.7 m at 3.9% Pb, 0.2% Zn and 114 grams per tonne (g/t) Ag from 65.8 m (including 5.6 m at 6.8% Pb, 0.2% Zn and 209 g/t Ag from 66.9 m).

No significant tin results were returned at Zealous, but drillhole 17ZLDH001, located 300 m northwest of Zealous, returned 8 m at 457 parts per million Cu from 160.5 m. Alliance still considers Zealous an encouraging tin target based on historical drilling results, i.e. 7 m at 3.16 % Sn from 52 m and 5 m at 2.29% Sn from 128 m (Tyranna Resources ASX release 2 August 2016), but reports it is not planning any further exploration there in the short term.

Current exploration will focus on four separate electromagnetic (EM) targets. In an ASX release on 11 October 2017 Alliance confirmed that drill testing of four regional ground moving loop EM (MLEM) target areas would commence in mid October. Ground MLEM surveys over the remaining regional heli-EM conductors are also scheduled to commence in October to better define conductors for drill testing.

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Andromeda Metals

Andromeda Metals has executed a binding heads of agreement with Lady Alice Mines to form the Wudinna gold farm-in and joint venture over six of Andromeda’s tenements which make up the Eyre Peninsula gold project ( ASX release 31 October 2017 ). The project includes the Wudinna Gold Camp, a cluster of close-spaced gold prospects including the Barns, Baggy Green and White Tank deposits, which have been the recent focus of exploration activities. Under the terms of agreement, Lady Alice Mines will sole fund up to $5 million through a staged earn-in over a maximum six-year period to earn up to 75% equity. The agreement will substantially increase exploration activities and significantly advance the Wudinna Gold Camp project towards a decision to mine.

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Archer Exploration

Archer Exploration has acquired Carbon Allotropes, an online graphite and graphene marketplace, strengthening its competitive position by combining distribution, production and supply (ASX release 30 October 2017). Carbon Allotropes sells products to international and domestic customers.

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Boss Resources

Boss Resources has announced early success with the operation of the field leach trial and resin ion exchange pilot plant at its Honeymoon uranium project (ASX release 4 October 2017). The pilot plant had reached a stable steady-state of operation with the first campaign underway and also satisfying key technical validation steps during these early commissioning stages on real leach liquor. Boss states that it has successfully demonstrated the reliability and economic viability of recovering uranium from the Honeymoon type solutions and is on track to developing an effective process for Honeymoon type liquors with high chloride.

An ASX release on 26 October 2017 reported further successful progress with the trial and pilot plant. Leaching is in progress from two well field patterns: one in a higher grade area and one in a lower grade area. Results indicate that uranium contained within the Honeymoon deposit can be leached and its recovery from underground is achievable. The project remains on schedule for completion in November 2017

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CU River Mining Australia

Chinese-backed, private iron ore miner CU River Mining Australia has secured approval for two new pits at its Cairn Hill magnetite mine near Coober Pedy (The Advertiser 18 October 2017). CU River has pledged to spend $800 million to expand the mine and boost production to 3 million tonnes per annum (Mtpa), part of a plan that could see the operation step up to 15 Mtpa over time. The company estimates that 1,300 new jobs will be created through the mine expansion as well as other developments.

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Havilah Resources

Prefeasibility study (PFS) work on Havilah Resources’ Kalkaroo copper–gold project is progressing as planned and expected to be completed by the end of 2017 (ASX release 19 October 2017). RPM Global (PFS manager) has validated Havilah’s upgraded resource estimate of 232 million tonnes (Mt) at 0.49% Cu and 0.37 g/t Au, with a less than 4% change in tonnage and a 15% increase in the measured resource.

An extensive metallurgical testing program has validated Havilah’s previous metallurgical work, with generally improved metal recoveries. Locked cycle tests for the chalcocite ore generated greater than 83% Cu recovery and greater than 72% Au recovery with a concentrate grade of greater than 29% Cu in only one stage of cleaning, indicating no abnormal metallurgical recovery challenges. Gold recoveries in the native copper ore are greater than 72% Au using a combination of gravity and flotation.

Wanbao Mining (Havilah’s memorandum of understanding partner and PFS sponsor) is expected to make a decision on its possible future participation in the project shortly after the delivery of the PFS.

A large magnetotelluric (MT) conductive anomaly has been identified in the northern part of Havilah’s tenements, the result of a new MT survey recently undertaken by the Geological Survey of South Australia and the University of Adelaide as part of the National AusLAMP program (ASX release 27 October 2017). The Jupiter MT anomaly will be subject to further exploration with the objective of defining a drill target when Havilah has funds available. The Government of South Australia’s PACE Copper initiative funded the research work.

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Hillgrove Resources

Exploration activities at Hillgrove Resources’ Kanappa project have extended the copper–gold mineralisation from 3.6 to 4.8 km, with soil and rock chipping sampling of mineralised outcrops within the extension zone recording up to 6.5% Cu and 0.8 g/t Au (ASX release 20 October 2017). Four distinct geochemically and geologically distinct mineralised areas have been identified:

  • eastern copper–gold zone, up to 4 g/t Au with anomalous tungsten (to 0.4%), tin and molybdenum
  • central zone, up to 34% Cu and anomalous silver and bismuth
  • western zone, 4.4% Cu, zinc and local magnetite
  • northern copper zone, 0.9% Cu and 0.1 g/t Au.

Electrical and magnetic geophysical surveys are underway to define potential drill targets.

Other growth opportunities being pursued by Hillgrove in 2017–18 include depth extensions to the copper–gold orebodies currently being mined at Kanmantoo (ASX release 20 October 2017).

Prolonged bad weather during the third quarter affected mining operations at Kanmantoo resulting in lower than anticipated copper production (ASX release 30 October 2017). A total of 811,000 tonnes (t) of ore was mined at an improved head grade which kept the mill at its target 3.3 Mtpa annualised throughput, and resulted in production of 3,548 t of copper and 1,900 ounces (oz) of gold. The lower copper production increases the C1 Cost for the third quarter and the year.

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Investigator Resources

Advance of the Paris silver project remains Investigator Resources’ main priority since the April 2017 release of the resource upgrade to indicated and inferred categories of 9.3 Mt at 139 g/t Ag containing 42 Moz of silver at a 50 g/t Ag cutoff (ASX release 19 April 2017).

The PFS is being extended into 2018 to take account of the opportunity for a larger resource and robust metallurgical model (ASX release 9 October 2017).

Current activities associated with the PFS include:

  • commencement of advanced metallurgical work on representative drill samples
  • progression of the hydrological study of a potential water supply
  • induced polarisation geophysics
  • drill testing Paris extensions/surrounds under an improved target model.

In the same ASX release the company stated that investigations are continuing at the Nankivel copper–gold prospect with additional targets identified and heritage surveys underway to achieve clearance for future drilling.

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Lincoln Minerals

Lincoln Minerals achieved a final milestone in the development of its flagship Kookaburra Gully graphite project with submission of the program for environment protection and rehabilitation (PEPR) to the Government of South Australia on 29 September 2017 (ASX announcement 2 October 2017). With the Kookaburra Gully mineral lease granted in mid 2016 and the PEPR submitted, Lincoln is targeting mine production and processing plant construction to commence in 2018–19, subject to financing and government approval.

The Kookaburra Gully total mineral resource – 2.0 Mt at 15.2% total graphitic carbon (TGC; 5% TGC cutoff) measured, indicated and inferred – is a global top 10 based on grade and ensures a life of mine of at least eight years. Lincoln is confident that the Kookaburra Gully graphite project could be further extended with the future development of the historical Koppio graphite mine and Kookaburra Extended deposit.

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First metallurgical test results on the Goshawk mineralised zone at Marmota’s Aurora Tank indicate gold recovery returns of between 94 and 97% and imply that gold mineralisation drilled to date is readily leachable with fast leaching kinetics (ASX release 27 October 2017). This outcome has positive implications on likely processing costs.

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Minotaur Exploration

Minotaur and alliance partner OZ Minerals have finalised a drill plan on four targets immediately north of the Prominent Hill copper–gold mine, prioritised after an extensive ground electromagnetic survey in the area in September (Minotaur media release 9 October 2017). The focus is the Skylark Shear Zone, a significant regional structure. Four diamond drillholes totalling 1,225 m are envisaged, targeting shallow bedrock conductors at Mavericks, Nexus and Bellatrix East (2 drillholes; ASX release 16 October 2017). The program is expected to take four weeks, commencing in late October.

At the North Flinders project (Minotaur 10%, Perilya 90%), two small areas of anomalous base metals have been identified from soil sampling programs conducted by Perilya at Warraweena and Mount Rugged. Additional soil and rock chip sampling is planned at Mount Rugged.

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OZ Minerals

OZ Minerals reported a strong September quarter for both Prominent Hill and Carrapateena (ASX release 16 October 2017). At Prominent Hill, the open pit unit mining cost guidance has been revised downwards by about 5% and a net saving of $10 million is proposed by accelerating mining and bringing forward open pit closure to early 2018. Underground production was up by 15% and unit costs 21% lower than the prior quarter. The completion of the second decline in August has had an immediate impact enabling productivity and efficiency gains as the underground works towards an increased production of 3.5–4.0 Mtpa in 2019. Operation is on track to deliver all other guidance metrics.

At Carrapateena work on phase one of the project is underway for the airstrip and accommodation village, key contracts have been finalised and orders placed for long-lead items associated with the process plant. Decline development is on schedule with the second decline breaking through the boxcut. Decline development now totals 3,017 m.

At the Intercept Hill project, approximately 50 km west of Carrapateena, OZ Minerals’ partner Red Tiger Resources undertook further geological and geophysical interpretation of the data derived from the initial drilling program (ASX release 25 July 2017). A fourth target was identified and, with heritage/access agreements secured, drilling is anticipated to begin early in the fourth quarter of 2017.

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Renascor Resources

Continuing studies on the Siviour graphite project by Renascor Resources have confirmed that it is economically robust in a number of development scenarios (ASX release 27 October 2017). In particular, in addition to offering impressive returns as a large-scale operation, Siviour offers a competitive pathway to production through a low start-up capital, two-staged development. Renascor anticipates that the prefeasibility study, which has now been expanded to include further consideration of the two-staged approach, will be completed in the first quarter of 2018.

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Rex Minerals

Rex Minerals has been granted an extension for the submission of its PEPR for the Hillside copper–gold project on Yorke Peninsula (ASX release 2 October 2017). The Government of South Australia had extended the deadline to 26 February 2018.

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Tyranna Resources

Results have been released from Stage 2 drilling at Tyranna Resources’ Typhoon gold prospect, part of the Jumbuck gold joint venture project with WPG Resources (ASX release 18 October 2017). Best results include:

  • 11 m at 2.72 g/t Au from 35 m, including 2 m at 6.31 g/t Au (030)
  • 12 m at 1.58 g/t Au from 30 m, including 3 m at 3.41 g/t Au (031)
  • 4 m at 5.74 g/t Au from 23 m (029)
  • 3 m at 4.23 g/t Au from 23 m, including 1 m at 10.00 g/t Au (030).

The results indicate shallow continuous gold mineralisation at Typhoon extends over a strike length of around 500 m. Typhoon is located approximately 39 km south of WPG’s Challenger gold mine.

At the Greenewood gold prospect, also part of the Jumbuck joint venture, drilling has been completed and results are awaited.

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WPG Resources

Encouraging gold results from the Phase 2 drilling program of the M2 Lode at WPG Resources’ Challenger Deeps have been reported (ASX release 26 October 2017). Best results include:

  • 1.14 m (true width) at 34.93 g/t Au from 16.81 m downhole (17CUD2194)
  • 0.85 m (true width) at 5.10 g/t Au from 22 m and 0.75 m (true width) at 7.21 g/t Au from 74.49 (17CUD2196)
  • 0.23 m (true width) at 33.44 g/t Au from 83.00 m downhole (17CUD2197)
  • 0.58 m (true width) at 7.18 g/t from 53.68 m, 0.76 m (true width) at 9.21 g/t Au from 55.97 m and 0.6 1 m at 7.07 g/t Au from 94.81 m downhole (17CUD2198)
  • 0.85 m (true width) at 7.16 g/t Au from 105.00 downhole (17CUD2199).

The latest M2 Lode intersections are similar to those seen in levels above the shear where multiple folds were successfully mined at grades in excess of 5 g/t. These additional folds, outside of those assumed in the mine planning, could potentially increase the ounces per vertical metre above those used for initial planning purposes.

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Ministerial news releases

Port Pirie Transformation milestone as first feed into furnace

Tom Koutsantonis, Minister for Mineral Resources and Energy
31 October 2017

The South Australian Government supported Port Pirie transformation has achieved a major milestone with the first feed into the Top Submerged Lance (TSL) furnace, the centrepiece of the new facility. The first feed into the TSL furnace marks an important step in the hot commissioning process underway at Port Pirie to prepare the new facility for full operation. Nyrstar expects to begin ramping up production at the new multi-metal recovery facility early in 2018, bringing a step change to the environmental efficiency of its Port Pirie operations.

Magnetite mine expansion to create up to 1,300 new jobs

Tom Koutsantonis, Minister for Mineral Resources and Energy
19 October 2017

CU River has announced an $800 million expansion of their Cairn Hill magnetite mine near Coober Pedy, which the company estimates could create up to 1,300 jobs. The investment, which builds on the existing Cairn Hill mine, aims to triple magnetite production initially to 3 million tonnes a year and then step up to 15 million tonnes a year. CU River has committed to using South Australian suppliers wherever possible on the project. Investment Attraction South Australia will provide case management services to the company and help streamline its investment pathway.

Mining reform to drive growth and provide stakeholder protections

Tom Koutsantonis, Minister for Mineral Resources and Energy
18 October 2017

The state government has released the first amendment Bill as part of the Leading Practice Mining Acts Review. The Statutes Amendment (Leading Practice in Mining) Bill 2017 proposes amendments to the Mining Act 1971, the Opal Mining Act 1995 and the Mines and Works Inspection Act 1920, reflecting the 82 recommendations for amendment released online in September 2017. The Bill and the 82 recommendations propose balanced changes to better protect landowners and the environment, as well as increase transparency, cut red tape and attract investment in South Australia.

Survey reveals potential for mineral and water resources in state's Far North West

Tom Koutsantonis, Minister for Mineral Resources and Energy
5 October 2017

New airborne survey data is now available to help unlock the economic potential of the state’s Far North West. The airborne electromagnetic (AEM) survey covered 17,395 line kilometres of data in the Musgrave Ranges. The data will give regional communities access to information regarding groundwater resource potential and will help exploration companies target potential underground resources within the area.

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